Knowles Targets 30% Margins as Specialty Components Drive Growth

Knowles logo

MarketBeat

Thu, August 27, 2026 at 12:02 PM GMT+3 6 min read

KN -1.76%

Key Points

Interested in Knowles Corporation? Here are five stocks we like better.
Knowles has shifted toward specialized, customized components for medical technology, defense and industrial customers after divesting roughly $400 million in lower-margin commodity businesses between 2017 and 2023.
Management expects Precision Devices to grow more than 15% this year and sees a path for EBITDA margins to rise from about 24% currently to 30% within 36 months, driven largely by improvements in its Cornell Dubilier capacitor business.
Strong cash generation is supporting debt reduction, share repurchases and selective acquisitions, while defense-related RF filters—about 98% tied to defense applications—could benefit from increased U.S. and allied defense spending.

These 3 Stocks Just Got Upgraded—and Could Keep Climbing

Knowles (NYSE:KN) has reshaped its portfolio around specialty electronic components for medical technology, defense and industrial markets, Chief Executive Officer Jeff Niew said during an investor presentation. The company has divested lower-margin, more commoditized operations and is emphasizing customized products, margin expansion and cash generation.

Niew said Knowles generated just under $600 million in 2025 revenue and employs about 5,000 people globally. The company operates through two segments: Precision Devices, which supplies RF filters and several capacitor technologies to MedTech, defense and industrial customers; and MedTech & Specialty Audio, which sells miniature microphones and speakers into the hearing-health market.

Portfolio shift toward specialized products

→ Quantum Computing Is Raising the Stakes for Cybersecurity: 5 Stocks to Watch

Why Goldman Sachs Suddenly Boosted These 3 Trucking Stocks

Knowles sold its Consumer MEMS Microphone business approximately three years ago, according to Niew. That business supplied consumer-electronics customers including smartphone and earbud manufacturers, but carried lower gross margins and was more commoditized, he said.

The company also divested its Vectron commodity oscillator operation. Between 2017 and 2023, Knowles divested roughly $400 million in revenue from low-margin, slower-growth businesses, Niew said. He added that management does not currently expect to sell additional businesses.

→ Palantir's Kool-Aid Moment: The Math Behind Karp's Forecast

Update! What Is Congress Trading So Far In 2025?

Niew said Knowles' remaining portfolio is built around technologies that are customized for individual customer applications rather than catalog products. The company works with customers including Abbott, Medtronic, Raytheon and L3, he said, and its relationships with many customers span decades.

"We do not participate in the commodity portion" of the capacitor market, Niew said. He said Knowles combines specialized technology, close customer engagement and internally designed manufacturing processes intended to support high-mix production at scale.

Growth and margin targets

→ Looking Beyond NVIDIA? These 3 AI ETFs Are Beating the Market

Through the 2017-to-2025 period, the remaining businesses delivered an 8% revenue compound annual growth rate and 11% EBITDA growth rate, including acquisitions, Niew said. Organic revenue growth during that period was approximately 4% to 5%, with acquisitions accounting for the remainder.

Management's longer-term framework calls for 8% to 10% revenue growth including acquisitions and 10% to 14% EBITDA growth. Niew said recent organic growth has exceeded 10%, while EBITDA growth has also been ahead of the company's target range.

For the current year, Precision Devices is expected to grow more than 15%, compared with Knowles' long-term 6% to 8% growth objective for the segment, Niew said. The hearing-health business is expected to remain within its 2% to 4% historical growth range. He said the hearing-health operation generates gross margins above 50% and EBITDA margins above 40%.

Niew said Knowles could produce EBITDA growth near 20% this year based on the company's previously provided earnings information. He said EBITDA margins could be about 24% for the full year and exit the year above 25%, with management seeing a path to 30% EBITDA margins over the next 36 months.

Most future gross-margin expansion is expected to come from Precision Devices, particularly the Cornell Dubilier capacitor business, he said. Knowles acquired Cornell Dubilier for $263 million. Its gross margin was about 27% when acquired and has risen to the mid-30% range, according to Niew. Management sees a long-term opportunity to raise that margin toward the 45% to 50% range through product development, pricing, manufacturing absorption and operational improvements.

Cash deployment and acquisitions

Knowles has historically spent about 3% of revenue on capital expenditures, Niew said, though spending could approach 5% this year as the company expands capacity to meet demand. The company has used cash flow for debt reduction, share repurchases and acquisitions.

Net leverage was about 0.5 times at the end of the second quarter, and Niew said Knowles could approach zero net debt late this year or early next year. The company has committed to repurchasing at least enough shares to offset stock-based compensation and has repurchased more than that level in recent years, he said.

Management remains interested in acquisitions but intends to be selective. Potential targets could include additional RF, ceramic capacitor, film, electrolytic or mica capacitor businesses, as well as specialty component categories such as resistors and inductors, Niew said. He said acquisitions must fit Knowles' technology and customer-customization model and provide a clear path to value creation.

Defense and manufacturing position

Niew said RF filters represent about an $85 million business this year and are approximately 98% tied to defense applications. The products are used in electronic warfare, radar, communications, target identification, missile systems, drones and related defense platforms, he said.

He cited potential higher U.S. defense spending, munitions replenishment and increased defense spending by U.S. allies as possible drivers for the company's defense business over the coming years. Knowles sells to defense prime contractors rather than serving as a prime contractor itself, he noted.

The company conducts all of its own manufacturing, with three facilities in Asia and five in North America, Niew said. He said Knowles is vertically integrated in areas including plastics molding, metal stamping and micro-coil winding, capabilities that support its specialized products.

About Knowles (NYSE:KN)

Knowles Corporation (NYSE: KN) is a leading developer and manufacturer of advanced micro-acoustic, audio processing and precision device solutions. The company's product portfolio includes microelectromechanical systems (MEMS) microphones, balanced armature receivers, acoustic filters, and custom audio processing integrated circuits. These solutions are designed to enable clear speech, enhanced voice capture and intelligent audio performance in a variety of end markets.

Founded in 1946, Knowles has evolved from its roots in vacuum tube components to become a pure-play audio technology provider following its spin-off from Dover Corporation in 2014.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

The article "Knowles Targets 30% Margins as Specialty Components Drive Growth" was originally published by MarketBeat.

View MarketBeat's top stocks for August 2026.